SICC releases its first decision

August 2016 | EXPERT BRIEFING | LITIGATION & DISPUTE RESOLUTION

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After just four months of deliberation, the Singapore International Commercial Court (SICC) handed down its eagerly anticipated inaugural decision on 12 May 2016: BCBC Singapore Pte Ltd and another v PT Bayan Resources TBK and another [2016] SGHC(I) 01. The dispute, which was transferred from the High Court to SICC, concerned a joint venture agreement between Australian, Indonesian and Singaporean parties. The esteemed panel comprised Singapore High Court judge, Justice Quentin Loh, former English High Court judge, Vivien Ramsey, and former judge of the Court of First Instance in Hong Kong, Anselmo Reyes.

Case precis

The case arose mainly from alleged breaches of a joint venture agreement for the application of a patented technology to produce and sell upgraded coal from East Kalimantan, as well as the business and operations of a joint venture company incorporated in Indonesia.

Essentially, BCBC Singapore, a wholly-owned subsidiary of Binderless Coal Briquetting Company in Australia, commenced proceedings against Indonesian company PT Bayan Resources TBK. In these proceedings, the latter brought a counterclaim against BCBC Singapore and its parent company in Australia, White Energy Company. The claim was for approximately US$750m and the counterclaim was for about US$59m.

By agreement, the parties asked the SICC to decide, in this first tranche, issues relating to the contractual obligations of the parties. It will be decided in later tranches as to whether these obligations had been breached or not. For the first tranche, the nine issues that the SICC had to determine related to funding and coal supply issues under the joint venture, as well as counterclaim issues on implied duties.

The SICC found that the Indonesian party PT Bayan Resources TBK was not obliged to provide additional funding to the joint venture company during the material period. However, it declined to decide on the coal supply point on the grounds that it had heard insufficient evidence on the issue at this juncture. The SICC was of the view that this could be determined at a later tranche in the proceedings.

As for the counterclaim, the SICC held that BCBCS was not under an implied contractual duty to use the reasonable skill and care to be expected of a competent designer, builder and operator of coal preparation and briquetting plants in providing technical assistance to the joint venture company. Also, there was no implied term in either the joint venture deed between the parties or in the memorandum of understanding pertaining to funding, that BCBC Singapore was under a contractual obligation to procure that the joint venture entity produces a certain amount of upgraded coal briquettes within a reasonable period of time.

Commentary

Singapore has developed a formidable transnational dispute resolution triumvirate comprising of the SICC as well as the Singapore International Arbitration Centre (SIAC) and the Singapore International Mediation Centre. The SICC is intended to complement the SIAC, by enhancing the suite of dispute resolution services available here, attracting parties that would not have come to Singapore to resolve their disputes in the first place.

The speed at which the judgment was handed down is laudable, although this could be partly attributable to the proceedings being divided into tranches. This efficiency was achieved through the monthly case management conferences, whereby the judges closely monitored and proactively managed the procedural aspects of the matter. Also, the trial for the first tranche was wrapped up in nine days, even though the matter had been fixed for hearing for 15 days.

One of the significant features of the SICC is that it may determine questions of foreign law on the basis of legal submissions alone. This is more in line with modern international arbitration practice; whereas for normal Singapore court practice, questions of foreign law would be treated as matters of fact requiring expert evidence. In this matter, one of the defendants’ Indonesian law experts made oral submissions before the SICC on O 110 r 25 of the Rules of Court.

Another of international commercial arbitration’s best practices adopted by the SICC is the separation of the proceedings into different tranches. This means that the proceedings will end if the plaintiff is unsuccessful at any phase, thus obviating the need for the prolonged procedure, legal arguments and evidence of a full trial.

It is worth noting that these proceedings were originally commenced in the Singapore High Court and transferred to the SICC on 4 March 2015. The fact remains that the new court may not attract a significant number of cases in the immediate future as it would need time to gain international traction. One possible course of action would be to persuade both local and international companies to incorporate SICC or Singapore jurisdiction clauses into their contracts as the court of choice to adjudicate any disputes that may arise.

Clearly, the SICC has a lot to offer in that it seeks to combine the advantages of litigation and the best practices of international commercial arbitration.

Debby Lim is a partner at Shook Lin & Bok LLP. She can be contacted on +65 6439 0633 or by email: debby.lim@shooklin.com.